The comment follows the Reserve Bank's latest loan loss figures
The Opportunities Party (TOP) is urging the Reserve Bank of New Zealand (RBNZ) to introduce a universal basic income (UBI) as Quantitative Easing (QE) programme stimulus.
TOP suggested that the RBNZ should provide a UBI of $250 per week to every adult in New Zealand, and the party would institute a “debt jubilee” policy to push down individual debt levels.
Under the policy, individuals and households with personal debt would have to divert the UBI to this first until they paid off their debt. Meanwhile, individuals without debt would still receive the UBI as per TOP policy and could use it as additional income to spend and stimulate the economy.
“Desperate times call for new ways of thinking, and we are calling on a fundamentally new approach to Quantitative Easing. The Reserve Bank should continue to pump cash into our economic system, but in a way that doesn't push up asset prices and debt for households,” said TOP leader Geoff Simmons.
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Simmons pointed out that the RBNZ's latest figures revealed the economic impacts of the COVID-19 crisis.
With the RBNZ interest rate close to rock bottom, it only makes sense for the government to give it new levers to stimulate the economy back to life – including diverting the QE programme into wiping out personal and household debt, Simmons said.
“[The] figures by the Reserve Bank show that their loan loss provisions are five times higher than pre-COVID levels in December 2019, which tells us that the economic pain caused by the virus is far from over,” he continued.
“The only lever that the Reserve Bank has in the toolkit is to drop the official rate of interest, and it's pretty darn close to zero right now, with plenty of economic pain to come. Also, dropping interest rates just encourages individuals and households to take on more debt at a time when we need to avoid increasing personal debt if at all possible.”
